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CS Professional · Internal and Forensic Audit · Reporting under Internal Audit

Kaveri Textiles Ltd's internal auditor completes a review of the procurement cycle. The CFO asks why a written report is needed when the findings were already discussed orally in the closing meeting. Which is the strongest reason for issuing a formal written report?

A formal written report is needed because it records findings and recommendations in a lasting, communicated form. Management and those charged with governance can then act on them and be held accountable. It does not replace management's responses, shift control responsibility, or remove the statutory auditor's own testing.

  1. AIt creates a documented, communicated record of findings and recommendations that management and those charged with governance can act on and be held accountable forCorrect
  2. BIt removes the need for management to respond to the findings
  3. CIt transfers responsibility for implementing controls from management to the internal auditor
  4. DIt is required only so the statutory auditor can avoid performing any testing

Explanation

A written report gives a permanent, communicated record of findings and recommendations, enabling follow-up and accountability. It does not remove management's duty to respond or shift responsibility for controls to the internal auditor. It also does not relieve the external auditor of testing.

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